Core Focus: The core design features of the digital euro: its legal tender status and mandatory acceptance rules, the distinction between online and offline functionality, and the privacy-by-design architecture.

In-Depth Notes:
The digital euro is designed to be a truly public facility directly backed by the ECB, complementing cash and existing alongside national and international private means of payment . Its core design features address the fundamental trade-offs between usability, privacy, and financial stability.

Legal Tender and Mandatory Acceptance:
The digital euro would be legal tender in the euro area, sitting alongside euro banknotes and coins . Most businesses would be required to accept it, with exceptions for the self-employed, small and micro enterprises that do not accept other digital payments, and temporary refusals in specific situations such as power outages . Both the Parliament and Council agree on the principle of mandatory acceptance, but differ on the scope of exceptions . Both texts also agree that a payer must be free to choose between euro cash and the digital euro, as both are legal tender .

Online vs. Offline Functionality:
The digital euro would be available both online and offline, ensuring resilience and inclusion even without internet connectivity . Online digital euro payments settle on the ECB ledger or through authorised intermediaries . Offline payments complete without an internet or network link, using secure hardware in a phone or card and synchronising balances later . Offline functionality is designed to provide cash-like resilience during local outages while preserving privacy for small-value payments . Offline payments would settle directly between users, meaning neither the ECB nor PSPs would have access to data related to offline transactions . However, offline transactions pose double-spending risks that must be mitigated by design .

Privacy by Design:
Privacy is a central pillar of the digital euro’s design. The pseudonymisation and encryption for online transactions ensures that the ECB would not have access to a user’s identity . Users cannot be identifiable based on data patterns . Offline transactions give users a level of privacy comparable to cash . Privacy safeguards would be built into the design, including tools intended to verify transactions without revealing personal data . The digital euro respects the General Data Protection Regulation (GDPR), including the principles of data minimisation and purpose limitation . A user would be identified only in line with EU AML/CFT rules .